Connecting with Community: How the e.l.f. Cosmetics’ Beauty Squad Disrupts Industry Norms and Shapes Culture

Since 2004, e.l.f. Cosmetics has made the best of beauty accessible to every eye, lip, and face. They make high-quality, prestige-inspired cosmetics and skin care products at an extraordinary value and are proud to be clean, vegan, and cruelty-free. As one of the first online beauty brands, e.l.f. continues to attract a highly engaged audience and set benchmarks with new digital platforms. The brand is also widely available at leading retailers such as Target, Walmart, and Ulta Beauty.

With its focus on disrupting industry norms, the e.l.f. Cosmetics Beauty Squad rewards program delivers a seamless experience, allowing its community to enter the beauty verse and earn points on their purchases from any in-store or online location. e.l.f. loyalists can shop where, when, and how they want while still earning points.
 
Recently, e.l.f. teamed up with American Eagle (AE) to launch a first-of-its-kind denim-inspired beauty collection. Both e.l.f. and American Eagle are GenZ favorites! This limited edition e.l.f. x American Eagle collection was all about bringing good looks and good jeans for your eyes, lips, face, and *both* sets of cheeks. For this collab, e.l.f. shared first access to its loyalty program members.

Mark Johnson, CEO of Loyalty360, spoke with Courtney Wachs, Vice President of Digital Commerce and Consumer Experience at e.l.f. Beauty, about the Beauty Squad rewards program, how the brand improves its customer experience for program members, and the recent AE partnership.

Read the full interview on Loyalty360 here: https://loyalty360.org/Content-Gallery/Featured-Story/Connecting-with-Community-How-the-e-l-f-Cosmetics-

Transcript

Mark Johnson: 0:05

Good afternoon and good morning. This is Mark Johnson from Loyalty 360. Hope everyone's happy, safe and well. Want to welcome you back to our ongoing series of the Leaders in Customer Loyalty. In this series, we have the privilege of speaking with leading brands about what they are seeing here on the front lines of Customer Channel and Brand Loyalty. Today, we have the pleasure of speaking with Courtney Wachs. She's a Vice President of Digital Commerce and Consumer Experience at e. l. f. Beauty. How are you today, courtney?

Courtney Wachs: 0:29

I'm great. How are you, Mark?

Mark Johnson: 0:31

Doing well, thank you. We'd like to start these on a more personal level. I'll get to know the person we were speaking with, a little bit about their history, the background, their passion points. So first off, I'd be great to know a little bit about you. You know, kind of your experience leading up to e. l. f. and what you do in your job at e. l. f.

Courtney Wachs: 0:48

Sure, so I like to think of myself as a little bit of a digital diva. I wear a lot of different digital hats. I am very passionate about all things D2C. Prior to coming to e. l. f., I was actually in entertainment for about 20 years, so that is a pretty big pivot to beauty, but I really love what e. l. f. stands for and their mission. My role at e. l. f. is to look after Digital Commerce and Consumer Experiences, which means my team manages our D2C website, Amazon and then all of the owned experiences that support one-to-one interactions with our consumers. So of course, that includes CRM and loyalty, SEO, UX and then consumer relations.

Mark Johnson: 1:41

Okay, great and a fun fact, a passion you may have outside of working Do you like to scuba dive? Do you have 14 kids? Do you tag, dance Something? A passion point?

Courtney Wachs: 1:53

Those are all really interesting. I do not have 14 kids. Actually, prior to being a digital diva, I was a diva of a slightly different sort. I used to sing opera. So music has been this amazing through line in my life and you're definitely much more likely to find me in a karaoke bar today than singing in aria. But back in high school I was classically trained and I actually started taking music lessons to get over what was a pretty bad case of stage fright, fear of speaking in front of people, and I sang opera as a mezzo-soprano.

Mark Johnson: 2:31

Oh, that's awesome. Well, that's great to hear. Hopefully we'll meet someday in person and we'll have to find a local dive bar and see how karaoke goes.

Courtney Wachs: 2:39

There you go. I love it.

Mark Johnson: 2:42

For e. l. f., a very familiar brand. I have three daughters so very ingrained with e. l. f. Can you give us a short history of e. l. f., how you guys were formed, what you do, how you do it and kind of how you go to market?

Courtney Wachs: 2:55

Yeah, absolutely Well. e. l. f. is a digitally native brand. It is truly in our DNA, and way back in 2004, so about 19 years ago, e. l. f. started with a disruptive idea, and that was to sell quality cosmetics over the internet directly to consumers for a dollar. Now, bear in mind, I believe, that 2004 was the year that Mark Zuckerberg basically created Facebook in his dorm room. This was pre iPhone. Cosmetics were not sold directly to consumers at this time. This was unheard of. So, from day one, e. l. f. created this really beautiful culture of disruption and I think really important to note, it's not disruption for disruption's sake. We call ourselves bold disruptors with a kind heart, which means we enjoy breaking down barriers, we enjoy trying new things, but we also do it in a way that is vegan, is clean, is kind, is cruelty free and, at the end of the day, our company is on a mission to bring the best of beauty to every eye, lip and face, and that's ultimately why I fell in love with the brand.

Mark Johnson: 4:10

Courtney, can you give us a brief overview of the e. l. f. Beauty Squad rewards program? How does the program work, how do individuals engage with the program and what are the benefits to the consumer?

Courtney Wachs: 4:21

Yes. So since digital disruption is really a part of our DNA, a critical piece of our DNA, we set out to create a best in class digital rewards program, which is e. l. f. Beauty Squad. So today we're over 3 million members strong. We've seen really great year over year growth and I think, most importantly, we've seen some truly incredible engagement from our from our fan base. The concept of the program is really simple. It's buy your favorite e. l. f. products anywhere and get rewarded. It's really as simple as that. We wanted to make sure that we were engaging and exciting our users, regardless of where they purchase, whether they're purchasing from our website or from any of our brick and mortar and online retailers. Some of the perks that you get as part of the program and, by the way, it's free to join, it's really easy. Some of the perks you get early access to sales that nobody else gets access to. Early access to product releases, to collabs, free shipping, special surprises on your birthday the list could go on. You know we're tremendously grateful for the support from our e. l. f. community and this is our way of giving back to them.

Mark Johnson: 5:39

Okay, one of the things we love to discuss is how people define customer loyalty, what it means to the organization and to the individual we speak with. So, in that vein, what does customer loyalty mean to you and what does it mean to e. l. f. cosmetics?

Courtney Wachs: 5:53

Yeah, community is really at the heart of everything that we do and in my mind, a good loyalty program is all about saying thank you to that community and giving back to them. We're giving them another reason to come back to us. Engaging with our e. l. f. fan base is truly a privilege, and I think we have a responsibility to create more than just transactional experiences. At e. l. f., we really believe in building relationships, in listening to our fans and in giving back to them in a variety of ways. And because we're listening to our fan base, the concept of what Beauty Squad was, is and will be keeps evolving, and what it means to be a member itself keeps evolving as well with the feedback that we receive.

Mark Johnson: 6:43

Okay, one of the things that we spoke of briefly as we kind of prepped for this interview. You talked about kind of being vegan, being responsible to animals and the testing process, and you know, I think it follows up nicely to this discussion around listening to and understanding your customers, right. So doing things that are corporately social, responsible in a manner that is genuine, adheres to the vision, the kind of the idea of the brand, which can be challenging for some brands, can you talk about that a little bit, just what it means from a CSR perspective, how you are doing things in a responsible manner for not only the product but the customers?

Courtney Wachs: 7:20

I think it all comes down to transparency. We make a promise to our consumers when we say that we're going to be vegan, kind and cruelty free, and we always put our money where our mouth is and we always try to take things a step further. Just last year we became the first fair trade certified brand. We're paving a path for, hopefully, other beauty brands to start doing the same thing. I really have seen, especially at e. l. f., that the more that you are doing right by your community, the more that you were doing right by the planet, it really does pay dividends at the end of the day.

Mark Johnson: 8:03

Okay, when you look at the digital transformation you spoke to it a number of times it's obviously significant importance for brands. Some brands are challenged, but some are doing it quite well. But how has your digital diva approach impacted the e. l. f. Beauty program and your customer loyalty efforts?

Courtney Wachs: 8:23

Yeah, no, it's a great question. Well, since I'm wearing a lot of digital hats, I always want to make sure that we are benefiting not just the consumer who is purchasing through our website, but from the consumer who is purchasing from all of our different retail channels. And sometimes the user who's only using our website is a very different user who's only going to Walmart or only going to Ulta, and we want to make sure that we're creating experiences that benefit all of those special guests. The other thing that we've done that I'm very proud of is we have launched our e. l. f. mobile app, and this has been a real game changer for our loyalists. When you talk about really meeting the consumer wherever they are, this is it. We have the mobile app, we have the website, we have all of our web channels. We are truly everywhere that the consumer wants to shop. We've had over a million app downloads to date. The vast majority of our app downloaders have joined Beauty Squad and the feedback that we've gotten is very positive. The app is easy to use. It's fun, receipt scanning is a breeze. Tools like our virtual try on help our users make decisions and, I think, to further reinforce the point of the importance of meeting the consumer where they are. What I'm fascinated by is, if you look at users who are using both the website and the app, you see this exponential multiplier in terms of sales. So sales are here with the mobile app they're looking great. Sales are here with website looking great. Users who use them both together are buying exponentially more. So again, I think it speaks to that channel strategy of when you go where your users are and where they want to shop, they will respond in kind.

Mark Johnson: 10:03

And partnerships are another area of great interest for our audience. We have a number of brands that meet every three months to talk about partnerships what's working, what's not working, how to make them more effective. So when you look at the most recent partnership you had between e. l. f. and American Eagle, how did that program come into being, what is the benefit for the consumers of the program and how did you structure it? That can be a value to both brands.

Courtney Wachs: 10:31

Yeah, absolutely Disrupting with like-minded brands is something that really gets our community excited and engaged almost as much as we're excited, and working with American Eagle really was a dream. Ae and e. l. f. have very similar values, so we're all about individuality and inclusivity and offering quality products at value, and, of course, ae has their iconic genes. So we had to create a denim themed beauty collection, which we launched at the end of March and we were all incredibly proud of. But something different that we did with this collection is we wanted to give our loyalists something special, something that we had never done before, and so we offered them exclusive access to the entire collection. You had to be a member of e. l. f. Beauty Squad in order to buy. And to take it a step further, we had our super special what we called Vault Skiw. That had every item in the collection as well as a very cute denim bag, and in order to purchase that, you had to be one of our top tier loyalty members. Well, this was a risk. We had never done this before, but I think the performance speaks for itself. We actually managed to sell out of that Vault Skiw in less than 48 hours.

Mark Johnson: 13:57

All right, so another thing that we hear a great deal around is how consumers are changing. There was some changes going into COVID, obviously coming out of COVID. How do you feel your consumers are changing and how are you adapting as a brand to those respective changes?

Courtney Wachs: 14:15

Yeah, you know, we were very lucky to have a very active and engaged audience before, during and after COVID. I mean, clearly, as we started to move out of COVID, we saw a spike in activity at brick and mortar. No surprise there. But interestingly, our digital channels continued to grow as well and we're investing in many different digital channels, as I've mentioned before. We have our website, we have our app, we have Amazon, we have social commerce, we have retailercom and we've seen growth across the board, I think, in terms of how our audience has evolved, and this actually has nothing to do with COVID, but it's something that I get really excited by. We have an incredibly high pass along rate, which means for the parents who first experienced e. l. f. in their teens, 20s, maybe their early 30s, it continued to use e. l. f. over time. We're seeing them pass e. l. f. along to their children and that is so incredibly special to me because it speaks to the relationship that we've been able to build with the consumer the brand trust, the brand love. So that's something that we're keeping a very close eye on.

Mark Johnson: 15:28

Okay, when you look at economy right now, a little bit of economic uncertainty. Depending on the brand there can be more or less. But one thing that we see is that if you have a strong customer loyalty focus, a strong adherence to the values in the core, customer loyalty in the program can be a hedge against some of this economic uncertainty. How do you think your loyalty program, loyalty processes that we've talked about, can help be that hedge?

Courtney Wachs: 15:56

Yeah. So e. l. f. as a whole specializes in offering high quality beauty products at OMG value. So, then, what e. l. f. beauty squad can offer is, above and beyond that, even greater value and then special access to things that you wouldn't normally have access to if you weren't a member. So I believe that the net results there are clear. We consistently see higher engagement, more time on site, more purchasing from our loyalists, and so I think they fully understand the concept that the more they engage, the more they buy, the more they get. Ultimately, what we offer, even during periods of uncertainty, is the emotional uplift of something that feels like an indulgence, without the accompanying price tag.

Mark Johnson: 16:44

Okay, excellent. And when you look at the success of your customer loyalty efforts, you know, are there certain KPIs or metrics that you look at that kind of tell the story about how the program is performing?

Courtney Wachs: 16:58

Yes, of course, we would love to continue to see exponential growth in terms of our membership base. We've seen strong growth so far, but it is not our number one metric. Your membership base is only as strong as the engagement that you see and the repeat purchasing that you see. So engagement is a much stronger metric for us. How often are users coming back? How much time are they spending? How does this compare to non-members? So, really, looking at that engagement, that purchase rate is key in measuring our success.

Mark Johnson: 17:32

Okay, and you've talked about some of the digital platforms that you were looking at engaging with. What's the next big thing for customer loyalty, customer experience for you and your team?

Courtney Wachs: 17:43

It's a great question and it's so difficult to answer because loyalty is so deeply ingrained in so much of what we have on the roadmap. But I'll try to cover a couple of things. Really, looking at leaning into more personalized experiences, personalized rewards, personalized content for our users is going to be key. Advancements in AI certainly are going to make it easier for us to look at these one-to-one experiences at scale, so we're very excited by that. Looking at creating, as we look at, our global audience, looking at creating more localized experiences by market and then introducing Beauty Squad to more of our audience outside of the US is critical for us. And then, finally, I mentioned that we have our buy anywhere, get rewarded approach. I think we can do more to elevate awareness of the fact that we have receipt scanning, that you don't just have to buy from the website, and we want to make sure that folks know that Beauty Squad is open to all, regardless of where you purchase, and we can do more to raise that awareness message.

Mark Johnson: 18:57

Are there other rewards programs? You admire brands you think do a great job of engaging the consumer in a personalized manner. What do you think they do well?

Courtney Wachs: 19:08

Our friends at Sephora and Ulta, I think, are really crushing it. They know their respective audiences very well and their audiences are a bit different between the two. They know their audiences very well and they have both done a bang up job of creating turnkey, fun, really valuable experiences that speak directly to those audiences. You know slightly different approaches for both of them. Ulta certainly leans more into discounts. They have a very flexible point space program that you can use for almost any purchase in store and online. Sephora leans more into perks, exclusivity, early access. They've done a great job of really building this very engaged and passionate beauty community. So these guys are really setting the bar high in different ways, and so it's challenging us to just keep innovating more with Beauty Squad.

Mark Johnson: 20:04

Okay, great. And the last question what can Loyalty 360 do for me to help you and the e. l. f. Beauty program keep on top of the customer loyalty efforts within?

Courtney Wachs: 20:16

Well, first off, we'd love for them to come in and join Beauty Squad. It's free to join. We're bringing the best of beauty to everyone. But I think, in terms of how we can keep on top of loyalty as a whole and keep challenging ourselves, I think the number one tip I would say is to just listen to your consumer. They're going to tell you, at the end of the day, what they need, what they want to see, and as long as you keep listening to that consumer and keep challenging yourself, you're going to win.

Mark Johnson: 20:44

Okay, excellent. Well, thank you very much for taking the time to speak with us today. It was great getting to know a little bit more about you. The fact that you were a brand singer in opera, that's great to hear. Again, looking for the karaoke opportunity, yes. And I would like to hear more about the program later in 2023. So thank you very much.

Courtney Wachs: 21:04

Thanks, mark, thanks for having me.

Mark Johnson: 21:06

Absolutely, and thank you everyone else for attending today. Make sure you join us back soon for our leaders and customer loyalty series. Have a wonderful day.